in response to HC 577: Private Military
CompaniesOptions for Regulation

SUMMARY

1. Over the next 50 years, the forces of
globalisation will render states as we presently conceive them
increasingly obsolete. States that fail to develop mechanisms
to manage this transformationnotably those where democracy
is weak and/or where wealth is poorly distributedare likely
to experience economic degradation, social upheaval, political
dislocation and, in many instances, open conflict. A baseline
requirement for rebuilding states immersed in such crises of legitimacy
will be the provision of effective and trusted security. The International
Community is currently inadequately equipped to handle such crises.

2. The professionalism and experience of
Britain's armed forces make them an unrivalled source of expertise
for such tasks. However, they are neither intended to carry out
long-running nation-building operations, nor are they likely to
have spare capacity to take on such tasks in the foreseeable future.
Widely varying levels of deployment, cost-effectiveness and the
lower profile of any particular "national" tag suggest
PMCs operating on a project basis would fulfil this role better.
But given historically well-founded doubts about the legitimacy
and role of PMCs, proper regulation will be essential. To be effective,
a regulatory framework should comprise, amongst other things,
the mandatory licensing of PMCs, well-defined, robust, but not
onerous operational terms of reference (including human rights,
environmental, developmental and other relevant considerations)
and a monitoring and evaluation body to ensure compliance.

INTRODUCTION

3. The Global Dimensions programme at the
London School of Economics and Bayard Limited, a risk management
consultancy, are working on a joint examination of the relationship
between security and governance. The approach is project-led and
addresses the following questions with a view to engaging the
appropriate experience and expertise to address each individual
question as follows:

 What do we mean by "security"
and to what extent may a state legitimately pursue it?

 What trends and forces are changing
the context in which states or international bodies provide security,
eg globalisation?

 Why do current bodiesnational,
international and private companiesstruggle to fulfil the
security task adequately, eg under-resourcing, inappropriate skills?

 How can we effectively evaluate and
monitor the performance of bodies providing security and their
impact on issues of governance?

4. This paper is work-in-progress. We would
welcome the opportunity to engage in dialogue about both the practical
and philosophical issues raised below.

ASSUMPTIONS

5. Worldwide requirements for security
are likely to continue to vary enormously from year to year.
In this context, it will be more cost-effective to outsource certain
security functions to private companies than to provide these
services from within standing national armed forces.

6. In a world where effective government
in many states is weak or collapsing, there will be increasing
demands on major powers and international bodies to respond
to issues of governance and security. There is therefore likely
to be an increasing demand for professional security services
from both international bodies and legitimate governments that
lack the resources and skills to guarantee security in their areas
of responsibility. Various types of technical assistance, logistical,
operational and training tasks are likely to be amongst the requirements.

7. The trend towards diminishing the share
of government in national economies, particularly in the West,
suggests that outsourcing for the provision of services
is likely to increase.

8. There is no spare capacity within the
UK armed forces to take on additional long-term security
tasks that contribute to nation-building (eg ISAF, SFOR), nor
is there likely to be in the foreseeable future.

ISSUES

9. Moral considerations over the
existence of PMCs and the legitimacy of outsourcing security tasks
to them need to beand we think can beaddressed.
Proper regulation and rigorous oversight should enable PMCs to
act as a potential force for good in the international arena.
The feasibility of deploying PMCs and monitoring units is a separate
question.

10. PMCs have traditionally existed on the
edge of mainstream international relations. They have generally
been ready to sell their services to the highest bidder regardless
of the latter's political legitimacy or human rights record. They
have rarely considered how their activities affect the long-term
political or economic development of the countries they operate
in.

11. The decision to deploy national military
assets in support of a given national or international policy
objective is little different in concept from the commissioning
of a project. As such the provision of security is, in principle,
no different from the provision of any other service such as social
welfare systems. Local transport or health care.

12. Appropriately defining the respective
roles of national military forces and PMCs will be a key determinant
of the successful use of PMCs.

13. By contracting a PMC, a government would
not evade difficult diplomatic decisions, nor can it insulate
itself from responsibility for the actions of that PMC in the
international arenathis strengthens the need for proper
and rigorous oversight. However, some complex international
situations may be simplified if armed forces bearing particular
"national" tags are not directly involved.

14. If they are to contribute positively
to the building or rebuilding of policies, new generation PMCs
will have to be very different in both concept and style of operation
from the popular image of post-colonial mercenary outfits. We
envisage them as potential key components of nation-building
projects, robustly regulated and monitored by their state
of domicilein this case, the UKand available to
international bodies or legitimate governments.

A REGULATORY FRAMEWORKPRACTICAL
RECOMMENDATIONS

15. We favour the incorporation of the following
recommendations in any regulatory framework:

16. Legislation in the form of an Enabling
Act (qv paragraph 72), allowing the government from time to
time to designate countries or other geographical areas in which
UK-registered PMCs may not operate armed units and for which it
would be illegal to recruit in the UK, either for official armed
forces or any other armed unit. The aim would be to prevent UK-registered
PMCs operating against UK national interests. For example, we
would envisage UK PMCs being banned from operations within the
EU, USA, Japan, etc.

17. PMCs must additionally be contracted
to entities approved by the British Government, ie a simple contract
approval system where the "product"general
military servicesremains constant and a judgement is made
as to whether the entity is suitable to receive it. A clear line
of responsibility must be defined (eg offshore subsidiaries, etc
should be avoided). The aim is to ensure that the PMC can, if
necessary, be held to account uder UK and international law.

18. Regulation of individuals employed
by PMCs, either as staff or contractors, eg anyone to be armed
must have served with UK armed forces (or have attended appropriate
UK forces training) and have received an honourable discharge;
or with specified other armed forces if a full service record
is available. PMCs should be able to provide evidence that their
employees meet these standards, have clean police and army records
and have been vetted by appropriate government departments.

19. PMCs would reapply for its operating
licence on an annual or two-yearly basis. The aim is to
place the onus on the company to demonstrate its suitability.
A monitoring and evaluation body would be responsible for submitting
a report on the company's past and present operations at the same
time.

20. Best practices should follow
or be developed from the UK-US Voluntary Principles (UK-US initiative,
21 December 2001), noting also the recommendations of the UN Sub-Commission
for the Protection of Human Rights and the Global Compact. Terms
of reference (ToR) for PMC operations should contain the necessary
internationally recognised benchmarks, but care should be taken
not to over-specify best practices in order not to stifle a PMC's
ability to carry out the tasks allotted to it. Familiarity of
the monitoring and evaluation unit with international best practices
will enable it to warn a PMC of activities it considers do not,
or may not, meet those standards.

21. A Monitoring and Evaluation Unit
answerable to the UK Government or contracting international
body should be established. It should be staffed by sectoral and
regional experts with the appropriate knowledge to scrutinise
the activities and conduct of any contracted PMC. Staff would
also need to be conversant with internationally recognised security
best practices and qualified in such fields as Human Rights, political
and economic development, environment, etc. The precise composition
of any M & E team would be dictated by the nature and scale
of the task.

Its primary function would be to monitor
compliance with the regulatory ToRs and report on such issues
to the British Government. Its monitoring, evaluation and reporting
activities must be systematic and admissible in British and international
courts of law. This remains the ultimate sanction.

In order to fulfil its mandate, the M &
E unit must have a right to full and unfettered access to
information (both at the decision-making point and in the field)
and to PMC operations, facilities, personnel and administrative
and financial records. This might, for example, entail M &
E staff attached to PMC units deployed in the field, reporting
in real time to a central co-ordination unit.

Accurate and reliable media reporting of
PMC operations would also contribute to the M and E unit's work
and should be encouraged.